Fannie Mae and Freddie Mac, the two government-sponsored enterprises critical to the U.S. housing market, issued an update regarding how sellers and their agents can handle buyer’s agent commissions. The update clears up some confusion and makes it easier to understand what’s allowed under the new rules.

What’s Been Clarified?

Immediately following the pending NAR settlement, it was unclear whether contributions a seller made to a buyer’s agent’s commission would be included within the total allowable contributions limits (ranging from 2% to 9% of the home’s price, depending on the loan type and purpose). These contributions are known as Interested Party Contributions (IPC).

However, with the latest guidance, Fannie Mae and Freddie Mac have clarified that payments made by the seller or the seller's agent towards the buyer's agent commission are now excluded from these IPC limits, provided these payments are common and customary for the market. This adjustment means:

1. Sellers can choose to contribute to the buyer's agent’s commission without this amount counting against the total percentage they are allowed to contribute towards closing costs and other fees.
2. Buyers have more room to negotiate on other closing costs and fees, knowing that their agent’s commission will not affect the seller's contributions limits.

Why Does This Matter?

This clarification is significant because it aligns with the proposed National Association of Realtors (NAR) settlement agreement, which is still awaiting court approval.

By clearly separating the buyer’s agent commission from other seller contributions, the GSEs are ensuring that both buyers and sellers can make more informed decisions that are tailored to their specific circumstances.

Still Have Questions?

We’re here to help! Your local Movement Mortgage loan officer can help you navigate the changing homebuying landscape.